In a bidding war? Here’s how you can win it

Aly J. Yale
The Mortgage Reports contributor

Winning that bidding war

Finding yourself in a bidding war can be a big disappointment — especially if you had your heart set on the home. Fortunately, according to some new data, there are three sure-fire ways to win out.

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The bidding war blueprint

Bidding wars have dropped as of late, but that doesn’t mean they don’t still happen. And with the hot spring homebuying market just around the corner, buyers need to be prepared.

According to a new analysis from real estate brokerage Redfin, that means two things: stowing away some cash and brushing up those writing skills.

Redfin’s study looked at the efficacy of various strategies in bidding wars, and according to the findings, all-cash offers increase your chances more than any other option. In fact, the stats show that an all-cash bid improves your shot at success by a whopping 206 percent. 

Writing a personal letter to the seller is the second-most effective strategy. According to the findings, this move increases your chances 59 percent. 

Avoid these 7 mistakes when making an offer on a house

Finally, waiving the financing contingency is your third-best bet. This one ups your chance of success by 20 percent. As Redfin’s chief economist Daryl Fairweather explains, “Sometimes, financed offers fall through because the lender decides the buyer can’t afford the purchase or the buyer is too risky a customer. Especially in a less competitive market, sellers value an offer they know isn’t dependent on financing.” 

Verify your new rate (Aug 11th, 2020)

Bidding war strategies that don’t work

What doesn’t work in a bidding war? According to Redfin, waiving the inspection contingency. Pre-inspections by sellers aren’t effective either.

Here’s how the report explains it: “For homes facing competition, buyers will often begin by waiving an inspection contingency, knowing that any other bidders will be doing the same. Meanwhile, many sellers complete a pre-inspection in hopes that the homebuyer will then waive the inspection contingency and the sale process will be easier. Due to the varied use of these strategies, and their common prevalence in bidding wars, neither provide a significant competitive advantage.”

What’s a contingency in a real estate contract?

Get today’s mortgage rates

Want a leg up in case of a bidding war? Then shop around for mortgage rates and get pre-approved today.

Verify your new rate (Aug 11th, 2020)